Wineries Win Battle At Capital

Southeastern Arizona:
The Border Report

Significant business developments promise to fortify the economies of Arizona’s southern half

By Peter O’Dowd

After battle waged at the Capitol, local wineries still in the game. Poised to enter the State Legislature with a litigious flurry, Arizona wine growers dug in for a fight of David and Goliath proportions. When the dust settled and the vote was cast, the underdog had defeated a lobbying giant, leaving an unencumbered path for the future of the state’s wine industry.

The history of Arizona wine law is tangled in a bevy of U.S. Supreme Court cases and litigation in states that were previously consumed with distributing regulations. In a nutshell, with the approval of Senate Bill 1276 last May, Arizona wineries reaffirmed the right to self-distribute to restaurants and retailers. Smaller wine growers also secured the privilege to bypass wholesalers and ship directly to consumers via telephone, mail and Internet sales, or set up satellite tasting rooms and retail outfits away from their remote locales. These steps, which wine growers say are essential to their survival, were not allowed under previous legislation.

“You have to understand how dominate the wholesale part of the liquor industry has been for years from a policy standpoint,” says Rod Keeling, president of the Arizona Wine Growers Association and owner of Keeling-Schaefer Vineyards in Pearce, Ariz. “They were in total disbelief that a bunch of guys with dirt under their fingernails could come up here and convince the legislature that they ought to do something for us instead of something for them. I’m still not sure they know what hit them.”

Keeling and his colleagues feared wholesalers would convince lawmakers to revert back to a three-tier system that mandated even small wine makers sell to wholesalers who would then distribute to retailers, and ultimately, consumers. Keeling says an 11th-hour compromise between the groups was preferable to the lawsuit his organization would have brought if boutique growers were forced under the three-tier system. “That would have been death,” he explains.
So, instead of a deathblow, Arizona vineyards are in a position to expand. Kent Callaghan, who has received international attention for his varietals crafted 30 miles from the Mexican border, says offsite retail presence gives growers more options to stay in business. “Certainly you’ll see an increase in quality and quantity,” says Callaghan, who claims improvements are already brewing. “Nobody associated Oregon or Washington as a wine growing area 30 years ago. It took a while for the state’s wine to catch on with its residents. The same thing is happening here where people have stopped immediately acting negatively toward Arizona wine.”

Keeling agrees, but doesn’t shy away from past shortcomings. Five years ago he could only stomach two Arizona labels. Now he drinks six or seven. “We’ve added a lot of quality producers,” he says. “They are smarter, more committed to quality, not using the tourism model; it’s not being sold as a novelty but on its own merits. Kent Callaghan deserves all the credit for that.”

For years, Keeling says the state was stuck at eight or nine wine growers, but in the last two years that number has swelled to 22. What used to be a state of 12 or 13 vineyards is now the home to 32. Perhaps most telling are the production numbers: 15,000 annual gallons four years ago compared to 47,000 gallons today.

Indeed, the gears may already be moving and some predict Willcox will become the state’s vineyard epicenter. Amid favorable water and weather conditions in Cochise County, experienced wine grower Dick Erath bought 200 acres close to town. As these seasoned experts employ Arizona’s nascent vineyards, the relatively small knowledge base grows, techniques improve and the industry blossoms.
Of course, favorable legislation doesn’t hurt either.

NogalesExtra Lanes Slash 4-hour Border Wait
Nogales, Ariz.—Port Authority officials here anticipated a July completion of two additional commerce lanes linking Mexican and U.S. boundaries that would reduce agonizing wait times at the border. The $4.3 million expansion brings to four the number of lanes motorists and commercial trucks use to cross the border. Terry Shannon, chairman of the Greater Nogales-Santa Cruz County Port Authority, says the Mariposa Port of Entry can process 300 trailers effectively per day, but in reality 1,400 trailers line up daily on either side of the border. The glut creates an average wait of four hours. This is the first step in a larger plan to reconfigure the port. $9.8 million is secured in the 2007 presidential budget for a port with capacity for 3,000 trucks per day.

TucsonSlimFast Site to Can Beans, Not Shakes
Tucson, Ariz.—The former SlimFast manufacturing building in Tucson has been vacant for nearly two years, but plans are under way to fill the 440,000-square-foot plant with food of a different fare. Arizona Canning Company LLC, of Mexico, announced in June the building would house its U.S. headquarters, bringing 200 employees to the region in the next three years. The majority of the recruits will be from the Tucson area. By summer 2007, Arizona Canning Company plans to buy raw material from U.S.-based suppliers, receive it in Tucson, process and sell the plant’s output to U.S. markets across the country. “This will be a huge win for Tucson,” notes Joe Snell, TREO President & CEO.

BowieGasified Coal Emits a Fresh Breath
Bowie, Ariz.—Developers of the 600-megawatt Bowie Power Station announced the electric generation facility planned for Southeastern Arizona will now incorporate environmentally sensitive coal technology. The project will gasify coal before combustion for cost-effective generation while protecting the environment, creating local jobs and economic growth. Developers say the project will lessen Arizona’s dependence on natural gas for electric generation. “This is unlike a conventional coal plant where its pulverized and burned,” says spokesman Ian Caulkins. “In this case, mercury, sulfur and other contaminants are removed prior to combustion.” Bowie is expected to outperform the efficiency and emissions of existing coal power plants, which will make it one of the cleanest coal plants in the world. The Arizona Corporation Commission has already granted a certificate. All remaining regulatory requirements will be completed by 2007 and construction will then begin as soon as possible with commercial operation expected in 2012.

SuperiorBroadband a Boon to Local Businesses
Superior, Ariz.—Until recently, sending large files over the Internet was an exercise in patience for business owners in Superior. But a gift from the Arizona Department of Commerce will funnel in $35,000, bringing high-speed broadband infrastructure and the potential for hundreds of new jobs.
Superior businesses were hindered with limited dial-up connections, which severely limited communications, ordering products online and carrying out tasks as simple as e-mailing digital photos. “Our business has suffered as a result of our inability to access reliable infrastructure,” says Rozlyn Lipsey, a Superior business owner. Several local businesses have provided $1,000 matches to fund the project. The town has dedicated $25,000 and applied for an additional $270,000 from the federal government to enhance the initiative. An award announcement will be made this fall. Officials expect the improved connectivity will allow business the chance to grow, facilitating 300 full-time jobs.

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